2021 Ontario fall economic update – new corporate transparency reporting requirements proposed
On November 4, 2021, the Province of Ontario released its 2021 Fall Economic Update. Under the heading “Fighting Financial Crimes and Tax Evasion”, the government proposed new beneficial ownership information requirements for privately held corporations under the Ontario Business Corporations Act. The measures appear highly similar to the regime in place for companies incorporated under the federal Canada Business Corporations Act, and may have significant overlap with existing “transparency register” requirements for B.C. private companies.
The limited details provided indicate that, starting January 1, 2023, the proposed amendments would require privately held corporations to collect and maintain the following information on each “individual with significant control”:
- Name, date of birth, and address;
- Jurisdiction of residence for tax purposes;
- Date of becoming or no longer being an individual with significant control;
- A description of how the individual has significant control over the corporation, including a description of any interests and rights in shares of the corporation; and
- A description of the steps the corporation takes to keep this information current each year.
An individual with significant control is stated as being an individual who:
- Owns, controls, or directs 25 per cent or more of the voting shares of the corporation or shares that are worth 25 per cent or more of the fair market value of all outstanding shares of the corporation; or
- Has direct or indirect influence over the corporation without owning at least 25 per cent of the shares.
A person would also be an individual with significant control if they own or control a significant number of shares jointly with other people. In addition, if a group of related persons collectively controls at least 25 per cent of the shares of a corporation, then each person would be an individual with significant control. A related person would include an individual and their spouse, son or daughter, or any other relative living in the same house.
Corporations would need to update the above information at least once during each financial year, and within 15 days of becoming aware of any changes. However, the proposed requirements would not apply to corporations that offer securities to the public and their wholly owned subsidiaries.